Venture capital network and the M&A performance of listed companies

Abstract

Purpose

The purpose of this paper is to discuss how venture capital institutions can use their syndicated investment network to help listed companies to achieve better performance in mergers and acquisitions (M&A) activities.

Design/methodology/approach

This paper builds a fixed effect unbalanced panel regression model to study the impact of venture capital network on the M&A performance of listed companies.

Findings

Evidence indicated that the stronger the information resource acquisition ability of venture capital institutions in the network, the better the listed company's M&A performance supported; the stronger the information resource control ability of venture capital institutions in the network, the better the listed company's M&A performance supported; the higher the participation of venture capital institutions, the more significant the positive impact of information resource acquisition and information resource control abilities on M&A performance in the network.

Research limitations/implications

The data in this paper are from China's Growth Enterprise Market (GEM), other markets may be considered in the future research studies.

Practical implications

The research conclusions of this paper affirm the positive role played by venture capital institutions through syndicated investment in eliminating information asymmetry in M&A of invested companies. The information resource acquisition and control abilities and participation degree of the venture capital network have positively promoted the M&A performance of the invested enterprises.

Originality/value

The conclusions of this paper not only provide useful supplements to existing research literature on venture capital network functions and corporate M&A but also have certain guiding value for venture capital institutions and start-ups to better use venture capital practices to improve their capabilities and performance.

Citation

Jin, Y., Xu, M., Wang, W. and Xi, Y. (2021), "Venture capital network and the M&A performance of listed companies", China Finance Review International, Vol. 11 No. 1, pp. 92-123. https://doi.org/10.1108/CFRI-02-2020-0016